Types of Demat Account in India
There are three different types of demat account in india - Regular Demat Account, Repatriable Demat Account and Non-repatriable Demat Account.
Your shareholdings can be stored electronically in different types of demat accounts, which are mostly used to hold shares, bonds, stocks, ETFs, and other financial instruments. The inconveniences of having and keeping a tangible duplicate of investments are removed.
Stock market investors are required by the Securities and Exchanges Board of India (SEBI) to own one of the different types of demat accounts in order to make investments.
No direct investment can be made without demat account types, although indirect investments—like buying a mutual fund—can be made without one. There are various kinds of Demat accounts on the market, and investors can choose the one that best suits their needs.
Investors in India have access to a number of financial and physical investment products. While real estate and gold are primary investment options for Indian households, financial products are catching up fast. The Central Depository Services Limited opened 1.7 million new Demat accounts in 2021 and the total tally came up to be 51.5 million A surge in the number of new Demat accounts signals an increase in equity investors.
What is demat account?
A Demat account is used to store financial securities in the Dematerialised form. It is used to securely hold and trade shares in the Demat form. There are two main depositories in India that provide Demat account services—CDSL and NSDL.
The Three Types of Demat Accounts are As Follows:
- Regular Demat Account
- Repatriable Demat Account
- Non-repatriable Demat Account
Regular demat account
A regular Demat account is used by investors who reside in India. It is the best demat account for people who trade in shares. A regular Demat account is not required to trade in the derivatives segment. It is managed by the depositories but the opening and maintenance are handled by depository participants, popularly known as stockbrokers.
The Securities and Exchange Board introduced a new type of Demat account to promote financial inclusion in the country, called the basic Services Demat Account (BSDA). The basic services Demat account is similar to a regular Demat account with a slight difference in maintenance charges.
How to choose right type of demat account
Repatriable demat account
Non-resident Indians can also invest in the equity markets. However, they cannot use a regular Demat account to invest as repatriation of funds is not allowed from a regular Demat account. A repatriable Demat account allows the transfer of funds abroad but you need to have a Non-Resident External NRE bank account for it.
Non-repatriable demat account
Just like a repatriable Demat account, the non-repatriable account is meant for non-resident Indians with a slight difference. One can transfer wealth abroad through a repatriable Demat account, but the transfer of funds is not allowed in the case of non-repatriable Demat accounts.
The regular, repatriable and non-repatriable Demat accounts are different based on their functionalities. Demat accounts can be categorized into 2-in-1 accounts and 3-in-1 accounts.
- A 2-in-1 account offers trading and Demat accounts together.
- A 3-in-1 account offers a trading account, Demat account and a bank account together.
Conclusion
A Demat account is compulsory to apply for initial public offerings and to trade in equity shares. To choose the best Demat accounts, opting for credible stockbrokers is necessary. Open an IIFL Demat and Trading account to get access to quality research and tools. You do not have to pay demat account opening charges nor Demat maintenance charges for a year with IIFL Demat and Trading charges.
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Frequently Asked Questions
Three Demat account types are available in India: Regular Demat Accounts, Repatriable Demat Accounts, and Non-repatriable Demat Accounts.
Yes. An NRI can open a repatriable or non-repatriable Demat account to invest in the Indian stock market. They can open these accounts with an Indian registered depository participant.
A 3-in-1 Demat account offers a trading account, a Demat account and a bank account together to the investor as a comprehensive investment solution.
Both accounts are similar and cater to the investing needs of NRIs. The only difference is that a non-repatriable Demat account does not allow NRIs to transfer the funds abroad, which they can do with a repatriable Demat account.
The individual has to convert their current Demat account into the NRO category or open a new repatriable or non-repatriable Demat account to continue investing.